Due to legal and regulatory uncertainty, the majority of traditional financial institutions have been unwilling to offer banking services to cryptocurrency-related companies. However, this trend is slowly starting to change in 2019, with several smaller banks attempting to take advantage of the potential benefits that the cryptocurrency industry offers.
Below are five of the most crypto-friendly banks that are helping to support the industry.
Metropolitan Commercial is a relatively small community bank but through its support of cryptocurrencies, managed to triple its profits in the first quarter of 2018 compared to Q1 of 2017. In an interview with CoinDesk, CEO Nick Rosenberg noted his enthusiasm for the industry, referring to cryptocurrency businesses as "pioneers."
“There are some very interesting ideas coming out that could really change the way people do business," he said.
Despite ten years of demonstrable growth, cryptocurrency continues to be viewed as a regulatory risk by most traditional banks. Metropolitan is happy to take punitive measure and put policies in place to mitigate this risk - a move that has, so far, reaped the rewards. In particular, Metropolitan doesn't deal directly with physical crypto assets but instead simply provides banking solutions for companies that do. This still requires the bank to do extensive background checks on potential clients in order to address the concerns of regulators.
Silvergate is another U.S.-based firm that supports cryptocurrency businesses and institutional investors. As of March this year, it reported 542 crypto clients, including exchanges, investors and other crypto-related entities such as mining firms and blockchain developers.
The bank has been previously associated with well-renowned crypto startups like Coinbase, Circle, Gemini, and Kraken, and currently serves popular investment funds Polychain Capital and Kenetic. Most recently, it has begun investigating the issuance of fiat loans collateralized with cryptocurrency.
“This solution provides greater capital efficiency for institutional investor clients that wish to transact without needing to move liquidity on and off different exchanges," reports the bank.
Dominican-based EQIBank was the first licensed and regulated offshore digital bank, serving clients in 180 countries worldwide. Via a strategic relationship with respected custodial solutions provider Kingdom Trust, EQIBank can offer crypto and digital asset insurance up to $50 million.
"EQIBank is based offshore, is tax-free. We do not pay corporate, sales, income or capital gains tax. As a result, we can provide better services cheaper and more profitably than any traditional bank – even if we offer the same product." - Jason Blick, EQIBank CEO.
Headed by former members of HSBC, CreditSuisse, Bank of New York and UBS, the bank aims to provide fiat and crypto trading in a previously unavailable regulated and secure environment. It also offers both traditional loans and peer-to-peer lending secured by blockchain technology.
Following the launch of its digital wallets and Mastercard debit cards this year, EQIBank is now focusing on its expansion into European and Asian markets.
Crypto-friendly New York bank Signature made headlines earlier this year when it began accepting applications from crypto businesses based in the Caribbean island of Bermuda.
The Bermudan government has been promoting the small island as an intelligent choice of location for fintech companies and has worked to significantly improve the quality of its financial services landscape. As a result, Signature Bank vice-chairman John Tamberlane lauded the country for its regulatory framework and noted his excitement to work with the local government.
Signature Bank operates its own internal blockchain network called Signet and can provide deposit accounts and debit cards to cryptocurrency startups in the U.S.
Small New York-based Quontic bank has recently begun delving into the world of cryptocurrency. Last month it was reported that Quontic bank had registered an account for a company that makes Bitcoin ATM machines. The bank says it is tentatively investigating dealing with cryptocurrency-related companies ahead of the regulatory environment becoming more crypto-friendly.
“We’re looking to diversify our product offering and our customer mix by entering into that field," said Quontic chief executive Steven Schnall, speaking to CoinDesk.
Like most other crypto-friendly banks, Quontic is relatively small, with only $420 million in assets. It's founders, however, have been long-time crypto enthusiasts, with Schnall buying his first Bitcoin back in 2013. He and co-founder Patrick Sells even attempted to launch their own cryptocurrency, QCoin, back in 2017 before the market crashed and sidelined their plans.